Product placement in the DVR era

As DVRs become more popular and TV viewers use them to avoid watching …

The incredible shrinking audience

DVR use isn't the only reason that advertisers have been willing to take risks on new formats. While overall media consumption is up, broadcast television viewership is declining, and has been for years. The loss of viewers is especially acute in the coveted 18-34 year old old male demographic. With so many more media options, young men are increasingly opting to go elsewhere in search of entertainment. "18-34 year old males are turning away from broadcast television in droves," Quinn says. "They're playing video games, they're on the Internet, they're doing things other than traditional media."

This audience fragmentation has caused advertisers to look more closely at their traditional models. With the rates for 30-second spots continuing to rise even as the audience fell, advertisers were looking for new and creative ways to get the word out. When it became clear that placement could be effective on television, marketers were ready to buy. Between 1999 and 2004, product placement on television grew at an average rate of more than 2- percent—double that of placements in film. Though growth is expected to settle down in the coming years, PQ Media believes that the market will still be expanding by 9 percent a year in 2009.

So, fewer commercials, right?

So what does the future hold? Advertising money follows eyeballs, so wherever young people go, marketers are in hot pursuit. In the near future, that will mean an increase in all sorts of nontraditional advertising, such as webisodes, advergaming, cinema advertising, digital outdoor advertising, video game placements, and podcast ads.

There's still plenty of eyeballs glued to the TV, though, and the old broadcast television model isn't dead yet. But will the rise of product placement eventually kill off commercials altogether? Don't count on it. Though it may seem like double-dipping by the networks, most people in the business look at commercials and placement as complementary.

"So far we don't see it as killing the traditional 30-second spot," says Patrick Quinn. "In fact, right now it's more of a supplement. A good example would be the Pontiac Solstice a lot people talked about last year on The Apprentice, where Pontiac bought spots on either end of each segment, they sponsored the show, the major challenge was based around creating an ad campaign worthy for the Pontiac Solstice, and then in commericals people were encouraged to go online to get certificates for the first 1,000 Solstices. They sold out in forty minutes. It's more of a package deal right now. Will people see more branded entertainment? Yes. Is the thirty second spot going to completely die? Not in the foreseeable future."

What the foreseeable future does have in store is an increasingly blurry line between advertising and editorial content—and it's not an issue just for the TV world. As Deborah Wahl Meyer, a marketing VP at Lexus, puts it, "ideas can cross between advertising and editorial. It doesn't always need to have the 'advertorial' note on top." Jonathan Adelstein, one of the FCC Commissioners, warned against the dangers of just this approach in a speech last year. He used the example of a television chef who explained that the best kind of shrimp were frozen—a statement that the chef had been paid US$550,000 to make by a frozen shrimp company.

The industry is still working out where to draw the lines, but it's clear that much more is up for sale now than it was a decade ago. Just remember, though, that while advertising may feel pervasive, it's still possible to shut off the TV, head into the great outdoors, and take in something simpler—like a baseball game. After all, there's nothing quite like the smell of fresh-clipped grass and the crack of the bat and the roar of the crowd to remind you of the days before marketing messages squeezed themselves into every nook and cranny of our brains, and that's why I'll be first in line when the new season begins at US Cellular Field. Oh, wait...